Prices surged after the sales contract. Can I cancel?

What the Law Says

South Korean law treats signed sales contracts as binding. Cancellation is only permitted in narrow statutory circumstances — not simply because market prices rose after agreement.

Under the Korean Civil Act, a sales contract becomes effective upon mutual consent (Article 505). Once formed, it binds both parties regardless of subsequent price fluctuations.

Article 539 allows rescission only for specific reasons: fraud, coercion, mistake about essential elements, or lack of capacity. A general price increase is not listed.

Article 543 provides a limited exception: if an unforeseeable, extraordinary change in circumstances occurs *after* contract formation — and enforcing the contract would violate principles of good faith — courts *may* adjust or terminate it. But this requires proof that the change was truly exceptional (e.g., >10% cost shift due to war or natural disaster), not ordinary market volatility.

The burden of proof lies entirely with the party seeking cancellation. Mere financial hardship or regret over a bad bargain does not qualify.

Statutory Text

A contract may be rescinded if it was concluded by fraud, coercion, or mistake as to an essential element.

— Civil Act, s. 539 — Grounds for Rescission

Statutory Text

If an extraordinary change of circumstances, which was not foreseeable at the time of the contract, occurs after its conclusion, and performance of the contract would result in a grave violation of the principle of good faith, the court may, upon request of a party, rescind or modify the contract.

— Civil Act, s. 543 — Change of Circumstances

What to Do

Sources